In Bryan Caplan’s book The Myth of the Rational Voter: Why Democracies Choose Bad Policies, he outlines four biases impacting how most voters think about economics. One of the biases he identifies is anti-foreign bias – the tendency of voters to become especially pessimistic about the economic impact of dealing with foreigners. A recent book by Diana Mutz looks at this very issue. The book is called Winners and Losers: The Psychology of Foreign Trade. After reading this book I was left with the impression that if anything, Caplan may have understated the issue.
Mutz’s book, as the title suggests, focuses on how the typical American thinks about trade. She’s well aware that most members of the public are not well informed about economics. As she rather genteelly puts is, “even when asked about something simple and straightforward, levels of economic knowledge are not high,” and that while the public holds strong opinions on trade, “to say that people have opinions on an issue is not to say that those opinions are well-informed.” She drops comments like this throughout her book just often enough to prevent any economists reading it from experiencing too many blood-pressure spikes, and she has my thanks for it. But the subject is well worth exploring, as she points out – “People’s perceptions of the national-level impact of trade may or may not be accurate, but these perceptions are key to understanding their opinions on trade policy.”
As she explored the issue, Mutz found that her “studies did not paint as well-intentioned a portrait of trade opposition as I had anticipated.” Among the things she found was that “domestic ethno-centrism – differences in how positively Blacks, whites, and Latinos in the US judged their own group relative to other racial groups – was the best predictor of trade opposition. Those who didn’t like racial outgroups, didn’t like trade…I thought I was studying an economic issue, but people’s views were less about the bottom line than about what kind of people they viewed as deserving…In short, the roots of opposition to trade were not as rational and well-meaning as I had assumed.”
Far and away, the most common objection to international trade is the belief that it costs American jobs. But here’s a result that surprised her (and me!). She also looked at how American’s felt about foreign direct investment (FDI), where foreign companies invest in the United States, building their factories here and hiring Americans to work in those factories. What Mutz discovered was that voters opposed to trade because they believed it caused Americans to lose their jobs were also opposed to FDI, even when they believed it would create jobs for Americans. Mutz writes,
Contrary to my initial assumptions, the question tapping attitudes toward inward foreign direct investment was just as strongly correlated with the trade questions as the trade questions were with one another. This pattern is noteworthy for two reasons. First, it suggests that Americans’ attitudes on these questions are part of a single underlying attitude construct. Regardless of the particulars in any given question, people tend to be either drawbridge-up or drawbridge-down types when it comes to trade and economic globalization.
Second, this pattern foreshadows some of the discoveries to come, namely that opposition to trade is not, in fact, strictly about job loss. Attitudes toward inwardly-directed FDI and support for international trade are strongly positively correlated, even though the former brings jobs into the country, while the latter is assumed to cause job loss. What these items share is involvement with foreign countries, not a connection to job loss.
And this ties into why I think that Caplan, if anything, understates the extent of anti-foreign bias. Citizens aren’t merely pessimistic about the outcomes of interacting with foreigners – they are positively hostile to the idea, even if by their own lights it would be economically beneficial. Most surprising of all was that for trade opponents, a situation where trade results in a “win-win” scenario for America and its trading partner is still viewed unfavorably! As Mutz described it,
Those Americans who care about “winning” at trade prefer policies that benefit the ingroup and hurt the outgroup over policies that help both their country and trading partner countries. In other words, for a policy to elicit mass support in the US, it is important not only that the US benefit, but also that it hurt the trading partner country so that the US achieves a greater relative advantage.
This is pretty grim. While the anti-foreign bias described by Caplan seems to be a situation where Americans were unduly worried that foreign trade would harm Americans, it actually appears to be the case that those opposed to free trade would reject a scenario where even by their own lights free trade helped Americans if it also helped foreigners – they aren’t happy with Americans being helped unless foreigners are actively hurt in the process.
READER COMMENTS
Jon Murphy
Jan 10 2025 at 9:06am
Interesting read. Does Mutz provide hard-and-fast numbers or does she report general trends?
I ask because I am thinking about recent polls where people are concerned about the effects of international trade yet still want more of it (I write about one here, but the ones linked to in the comments also support the point).
I find these tensions interesting.
Kevin Corcoran
Jan 10 2025 at 10:55am
She reports hard and fast numbers, gathered from her own direct research rather than reference to data collected by others. One thing she found that also surprised me is that support for international trade actually increased among the generally trade-opposed cohort during Donald Trump’s presidency, likely on the grounds that these people believe that while Trump was president, trade would result in their preferred “we win, they lose” scenario, and were thus more enthusiastic about international trade. Indeed, one of the things Mutz notes is that opposition to international trade is not opposition to it in an absolute sense – many trade opponents favor trade, but only as long as (in their mind) the government uses tariffs and the like to create a “level playing field” because, as they put it, when the playing field is level, then the American worker will always “win.”
But I suspect there’s also a lot of variance in what polls report because, as Mutz also outlines, a large fraction of the public has opinions about trade that aren’t just poorly informed, but internally contradictory. For example, people opposed to trade oppose it because (among other reasons) they say foreign competitors will undercut American producers with lower prices, thus costing American jobs. They then go on to say they also oppose free trade because imported products are actually more expensive than domestically produced products, contradicting their own earlier statement. As she records it, “respondents talked about transportation costs, and how much it costs to fly to places such as China. They reasoned that the same product made in China would cost more because one would need to add in the costs of transporting it from China to the US. If it were made next door, those costs would not be incurred, therefore trade increases the costs of consumer goods.”
Another cause of inconsistent answers is that the general public often doesn’t understand basic economic terminology. Reviewing answers to a particular poll on economic policy, Mutz comments,
And, it turns out, a surprisingly large fraction of people don’t understand these distinctions, or actively misunderstand them, thus they may frequently give answers that don’t reflect their actual opinion.
One other note – Mutz also points out how traditional surveys tend to stack the deck with how they phrase questions. For example, she writes
Because of this, Mutz conducts her own survey into opinions on trade, and as she puts it, “These questions were designed to be simple and straightforward, to avoid providing arguments for or against international trade. The first question I posed was, ‘Do you think government should try to encourage international trade or discourage international trade?'”
All that said, I’d really like it if the surveys you cite turn out to be more accurate overall. Part of what made reading this book a bit disheartening was that as economists, we often think we can get people to be more supportive of free trade if they understood trade is not a zero sum competition, but a win-win form of cooperation. But if Mutz is right, that wouldn’t help much, because a large fraction of the population doesn’t actually want trade to be a win-win, and they’d be opposed to it if it was!
Okay, time for more coffee. That’ll cheer me up!
Thomas L Hutcheson
Jan 10 2025 at 12:26pm
This gives me an idea of how to do the surveys,
“Do you favor restrictions on imports that tax exports and subsidize importation of things not affected by the import restriction?”
“Do you favor or oppose lower real income produced by restriction of imports?”
BTW the rise in favorable attitudes toward trade (and immigration) during Trump1 could also be the “thermostat effect;” if Trump was against it, it must be OK.
steve
Jan 10 2025 at 11:48am
Most people dont have much interest in foreign policy or international trade in general. Hence, level of knowledge is low. In that case beliefs largely become tribal and people believe whatever their tribe believes. If the tribal leader suddenly says it’s good then it’s good, even if it was bad the month before. I think the thought influencers (think tanks, talk radio, media) find it much easier to make it out as a case of us vs them than promoting understanding and true dialog. For example while free trade is overall good it’s not as if it doesnt have some real and potential downsides but that means you are introducing nuance into the issue and the demagogues win out if try to have a balanced discussion.
Steve
Thomas L Hutcheson
Jan 10 2025 at 12:17pm
Grim as this is, getting more people to understand that things that LOOK anti-foreign (and are to some extent as most economic transactions are MUTUALLY beneficial) import restrictions and DFI (both directions) restrictions harm Americans, woud surly help.
A question about the Learner Theorem ought to be on the SAP for entry into the American governing class. 🙂
Mactoul
Jan 12 2025 at 12:36am
Americans is pretty generic term. It would be interesting to divide Americans into natives first generation immigrants and second generation immigrants.
It might be that the immigrants too have anti-foreign bias. In fact, “Foreign” may be too generic as well.
Perhaps some have concerns with a particular country, China or maybe India.
Ron Browning
Jan 12 2025 at 7:42am
Concerning anti-foreign bias I think you will find it quite common for an individual to be quite sour on immigration while also being very fond and protective of the immigrants in their life. These very common people do not see any incongruence between their opinions and their actions.
Philo
Jan 15 2025 at 12:09am
Reminiscent of the in-principle antisemite who adds, “Some of my best friends are Jewish.”